Ahead of Monday’s market opening, SEBI issued a statement urging investors to remain calm before reacting to the latest report from Hindenburg Research.
The U.S. short-seller on Saturday accused the chair of India’s market regulator of conflicts of interest, which it claims hindered a thorough investigation into allegations of manipulation and fraud at the Adani Group — charges that both Madhabi Puri Buch and the Adani Group have firmly denied.
"Investors should remain calm and exercise due diligence before reacting to such reports. Investors may also like to take note of the disclaimer in the report that states that readers should assume that Hindenburg Research may have short positions in the securities covered in the report," Sebi said in the statement released on Sunday.
SEBI addressed the report’s criticism of its actions, particularly regarding the issuance of a show-cause notice to Hindenburg Research on June 27, 2024. "Hon’ble Supreme Court in its order of January 3, 2024 noted that SEBI had completed twenty–two out of twenty–four investigations into the Adani group. Subsequently, one more investigation was completed in March 2024, and one remaining investigation is close to completion. During the ongoing investigation in this matter, more than 100 summons, around 1,100 letters and emails have been issued to seek information. Further, more than 100 communications have been made seeking assistance from domestic/foreign regulators and external agencies. Also more than 300 documents containing around 12,000 pages have been examined".
The report also alleged that SEBI’s amendments to the Sebi (REIT) Regulations, 2014, were made to benefit a large multinational financial conglomerate. Sebi refuted these claims, emphasizing that all regulatory changes follow a robust consultation process involving industry stakeholders, investors, intermediaries, advisory committees, and the public.
"Claims that such regulations, changes to regulations or circulars issued related to REITs were to favour one large multinational financial conglomerate, are inappropriate," it said.
Sebi underscored that the promotion of REITs, SM REITs, InvITs, and Municipal Bonds is aimed at the democratization of markets and financialization of household savings, not for the benefit of any single entity. Sebi said its Chairperson Madhabi Puri Buch has been making disclosures.
"It is noted that relevant disclosures required in terms of holdings of securities and their transfers have been made by the Chairperson from time to time. Chairperson has also recused herself in matters involving potential conflicts of interest". AMFI says attempt to create trust deficit
The Association of Mutual Funds in India (AMFI) has criticized Hindenburg Research, accusing it of attempting to create a trust deficit in the market and undermine the significant contributions of SEBI Chairperson Madhabi Buch. AMFI stated that recent external comments targeting Buch not only diminish her role in advancing the Indian capital market but also threaten the country’s economic progress. "These efforts to connect unrelated past events and create sensation must be recognized for what they truly are," the association, which oversees nearly ₹65 lakh crore in assets, remarked.
AMFI also warned that if such allegations go unchecked, they could pose unnecessary obstacles to India’s growth as the world’s fastest-growing economy. The organization noted that Hindenburg’s claims lack context and a proper understanding of the Indian regulatory environment, adding that they "seek to malign the hard-earned achievements of our nation."